1. How is the ETN from users’ wallets stored? Is it secure? Are there any plans for Electroneum to integrate a cold storage wallet?
We obviously won’t go into the details of the technical aspects of how users’ wallets are secured, but we have made our system as secure as we can. We’ve also enlisted HackerOne and BugCrowd to help ensure that it is the Electroneum network is continuously penetration tested by some of the best “white hat” hackers in the world.
That being said, it is a custodial wallet system. That means we look after the private keys for the user. Users should ALWAYS use the cold storage solution that we have provided since we launched in November 2017.
We have a paper wallet system that allows users to easily create an offline wallet, which is the users’ personal cold storage. They can manage the private keys and move ETN to and from these paper wallets via the app at no cost (other than the transaction fee).
The main reason we have not implemented a system as some exchanges have is that our system is fundamentally very different from how exchanges handle client crypto.
Crypto exchanges comingle user funds. I.e., a crypto exchange has a large wallet for BTC, for ETN, etc., and all client funds are stored together. That makes it relatively easy to move x percentage of funds into their own version of cold storage with a single transaction.
For us to move 20% of all funds into cold storage, it would require us to make over 2.7 million transactions! Each of our users’ wallets is a genuine crypto wallet, not a shared wallet or comingled wallet. In our opinion, that is much safer (hackers would have to make 2.7 million transactions to steal all the funds, where most exchanges would only require a single transaction).
We feel that Electroneum’s cold storage solution is good enough to allow users to manage their own private keys if they feel the need to do so. We recommend that the bulk of all crypto is kept in wallets that the user has access to the private key, and thus we recommend using our paper wallet system. However, please read the notes carefully, as the keys ARE the crypto, we can’t replace them or the crypto if the keys are lost or stolen.
I want to take this opportunity to update the community on the Ledger cold storage wallet. The Ledger Nano App coding is still under review by Ledger’s team, who saw a significant delay in this process due to the Covid-19 crisis. However, we should have good news in this regard in the coming weeks.
2. Do you have plans to enable other cryptocurrencies to have functionality in the Electroneum app? If so, in what form?
Perhaps in the future, there may be collaborations with other cryptos within our app and or AnyTask. There are no current plans to do so, and any decision on this would be made ONLY if it was in the best interest of Electroneum/ETN and the user.
3. Can you update us on where the TaskSchool project is and when that may be launched?
The TaskSchool website was finished a while ago, but we’ve been working with two places to develop pilot projects in two countries. These negotiations are ongoing as we work to ensure there is a very efficient way of monetizing the ETN that will be earned in those countries. I don’t have a date – but I’d like to point out that the site is a “nice to have” and in no way critical to the ecosystem of ETN. AnyTask is doing so well without it, and we had no idea it would be as successful as it is without any training.
4.Can you briefly explain how Electroneum will benefit from an SEC memo and an FCA registration?
Let’s call it a US Lawyer memo, not an SEC memo. Some cryptocurrencies that ran an ICO (such as Ethereum) are PROBABLY not a security. As such, they are okay to list on crypto exchanges in the United States.
If we can get a US legal memo that says that while we might be considered a security in the US, we may also NOT be a security, as there are some exceptions (such as Ethereum). If we can obtain this and get ETN listed in the US, it will be much easier for people in that country to buy ETN, which can enable them to get a discount on the fees at AnyTask.com, a functionality that is coming soon.
The FCA registration is mandatory under UK law for anyone working at our level in crypto assets. It is a hugely positive thing for us and the industry. We built a KYC/AML system in 2018 because we saw this as an inevitable eventuality.
The FCA is not yet regulating, but again, we assume this will also be inevitable, and this registration is the first step. For us, FCA registration ensures we are running our company in a way that is considered acceptable within the financial world. We have had to ensure that all our policies, security, AML, KYC, and legal issues are perfect for acceptance into a world that crypto has never been before.
We believe that by embracing a regulatory environment in crypto, we will be able to make accepting ETN very different from accepting other cryptocurrencies. We’ve spent the last couple of years working with large brands, and they are universally afraid of the cryptocurrency space, even if they want to be involved at a board level.
It is critical to remember that the banking industry has been extremely negative towards crypto, and all large (and small!) companies need to be very careful of their banking relationship. Imagine a large coffee shop brand that accepts BTC. That is excellent PR (but a bit of a nightmare to implement), and then it would be worth 0.01% of their global sales (for instance). They are now risking their existing banking relationship for a bottom-line profit increase of virtually zero. The risk versus the reward scenario of accepting crypto is not attractive for these large brands.
The banks, credit cards, and all other financial vehicles in the UK have an FCA registration number. We are joining that “club” and working directly in a way that shows we understand risk and want to ensure ETN is not used for money laundering or any other crime.
We hope that by showing we are part of the system – not OUTSIDE the system – we can de-risk the acceptance of crypto and allow big brands (or any brands) to work with us WITHOUT fearing their banking relationship.
Accepting ETN should be the natural choice in a market full of unregulated cryptocurrencies. Again, I’d like to point out that the FCA is NOT regulating cryptocurrencies at this stage, but we assume that step will be coming at some point). For two years, we’ve been operating voluntarily under the EU 5th Anti Money Laundering Directive. We continue to work in a way that ensures we are ready for the future regulatory environment.
5. Is Electroneum considering staking, if so, do you have any information on when this could happen?
No, we are not considering staking. However, I had a conversation with Chris and Andre – Electroneum blockchain developers – the week before last about a radical hybrid system that would allow our users to operate a real validating node and receive some reward. Unfortunately, this cannot be on the phone, but rather a laptop or desktop with fulltime internet connectivity. That is far from set in stone, and it would still not increase our token inflation over 2% but would be a fun way to get much wider distribution of validators – with very little processing power required, as it is not Proof of Work. Users would have to be full KYC to partake, and this is PURELY THEORETICAL at this stage! That means there are no plans for this yet.
6. Can you inform how many pre-mined tokens are left and what plans you have for them?
There are billions of pre-mined tokens left, which we’ve decided to be best managed by the business over a long time. Other projects (such as XRP) have a large pre-mine that is governed by the team. We will continue to use them as ad-hoc rewards and to further the project. Those two TaskSchool projects I’ve mentioned above, will both be kickstarted on the ground with some ETN distribution, for instance – which would come out of this pool. To make it very clear to our community, we have pledged that we will not take our token inflation rate above 2%. Since the block reward (validators reward) is 1%, this means we cannot and will not release any more than 1% of supply from the pre-mine in any one year. The figure will probably be lower than that – but that gives us a very solid footing in token inflation terms for the next four years. That token inflation is lower than nearly all top cryptos.
7. Are there any plans to give the M1 phone owners ETN rewards to fulfill the phone’s promise that pays you back?
That is already happening. We know the UUIDs of all the M1 phones in use, and they are receiving ETN rewards.
8. Is David Bull still an advisor, and can you give any updates on his involvement?
Yes, he is. He is focused on the TaskSchool projects mentioned previously, as well as on several other things that I can’t discuss at this point, but will (of course!) be great for ETN.